Orexigen posts a ‘for sale’ sign in the yard as weak Contrave sales raise concerns
The end may not be far off for Orexigen $OREX, one of the three biotechs which managed to get an obesity drug into the US market a few years ago, only to be crushed by a wave of indifference for their drugs’ modest effect on weight loss.
In a SEC filing on Monday the biotech said it is undertaking a ‘going concern’ review, and it isn’t making any assurances that it will be positive in the end. Its senior note holders could see debt payments speeded up if drug sales fail to hit $100 million, and they came in at just $18 million to $19 million in Q3.
There are different ways to handle debt, including renegotiating the terms, but Orexigen says that it is also pursuing talks for a sale or merger of the company, handing off what has been a colossal disappointment for all involved.
It wasn’t supposed to end up this way. Orexigen CEO Michael Narachi had been buoyant about his prospects, considering Takeda’s willingness to line up a partnership on marketing Contrave and field hundreds of reps to tout the therapy.
Orexigen quickly eclipsed Vivus ($VVUS) and Arena ($ARNA), with their rival therapies, but all the sales register as a micro product in biopharma, with little perceived upside. Takeda bailed on Orexigen in the spring of 2016, unhappy with the underperforming operations and the prospect of a pricey outcomes study.
A few days ago Orexigen won a court ruling in its patent fight with Actavis, but it did little to help. The company’s market cap has dwindled to $28 million.